What is the difference between a Form 1120 and 1120H?

Condominiums and homeowners associations have two income tax filing methods available to them. They may file Form 1120 or Form 1120H. Following is a brief comparison of each of these methods:

Form 1120 Corporate Method

  • Internal Revenue Code Section 277
  • Graduated Rates start at 15% for the first $50,000
  • Reserves must be capital in nature
  • Excess Income must be properly deferred

Form 1120H Exempt Method

  • Internal Revenue Code Section 528
  • Fixed Rate of 30%

No consequences for Reserves or Excess Income